Central bank independence is “essential” for Turkey’s long-term growth and development, the country’s largest and most powerful trade association said, ahead of a critical decision on Turkey’s interest rates. central bank in trouble this week.
The Turkish Industry and Business Association (Tusiad), in a 230-page report, called for fundamental reform in economic policy-making amid growing concerns over the health of the economy under President Recep Tayyip Erdogan.
In a thinly veiled critique of Erdogan’s fixation on high economic growth at all costs, including soaring inflation and financial instability, Tusiad said that long-term trends such as “independence central bank policy and prudent monetary and fiscal policy âwere more important for sustainable prosperity.
He added that although a rhetoric about rapid growth “occupies an important role” in the public discourse, “the most important and fundamental thing for the prosperity of the country is not short-term developments but the long-term trajectory “.
The group’s unusual criticism comes amid growing concern in Turkish business circles over the fall in the pound, which has continued to hit new lows: this year the currency has fallen by a fifth.
The country’s nominally independent central bank, which is under continued pressure from Erdogan to keep rates low despite high inflation, is expected to cut rates again at its meeting on Thursday. Last month, the bank lowered its benchmark interest rate to 18 percent even as annual inflation rose to over 19 percent.
Tusiad rarely criticizes government policy – a position that has frustrated opposition parties across the country. Founded in 1971, it represents 4,500 companies and its members generate 85% of Turkey’s total foreign trade, according to the association’s website.
Although his report makes no direct mention of Erdogan or his Justice and Development Party, which has ruled Turkey for 20 years, the intervention will be seen as an attack on the president and his increasingly erratic handling of it. the country’s $ 765 billion economy.
The report said that after witnessing improvements in the 2000s, when Turkey was working towards EU membership, indicators on rule of law, accountability and political stability had moved back.
He indirectly criticized the government’s polarizing rhetoric, calling for an approach to solve problems “from the point of view of ‘all of us’ rather than of ‘us and them’.” In addition to urging reform of institutions and laws, he called for a fundamental overhaul of education.
The Tusiad report comes just days after Omer Koc, one of Turkey’s foremost business tycoons, made a rare public intervention to warn of the damage caused by the country’s “exhausting” inflation and the soaring exchange rate.
On the same day, the main Turkish opposition leader, Kemal Kilicdaroglu, visited the governor of the central bank, Sahap Kavcioglu, to express his concern over the political interference in the bank.
Kilicdaroglu, who over the weekend warned officials the opposition would hold them accountable for their decisions if they won the next election, said the lira drop was hurting the country’s businesses and its citizens.
“I call Erdogan clearly and openly from here: please respect the institutional identity of the central bank,” he said after their meeting.